Conclusiones

1.7.1 Computer/Electronics industry

The computer and electronics industry is known for short product lifecycles. A big market has emerged for used PCs — both in developing and developed countries.

According to Gartner, 37 million secondary PCs were refurbished and exported to emerging markets in 2008.In emerging countries; approximately 15 million secondary PCs had to be discarded in 2007. Gartner estimates that by 2012, emerging countries will need to dispose of a total of 30 million secondary PCs annually. The need and opportunities for reuse of obsolete products cannot be over emphasized. Building to order is an effective way to minimize the return chain, as it allows manufacturers to postpone final transformation of the product until the end of the channel and configure the exact computer that the customer wants. The inventory holding period decreases sharply with this approach. This is in sharp contrast with the rest of this industry, which typically will have 30 to 60 days of inventory pre-sold into the channel. Manufacturers/retailers that sell directly to the customer and build to order have significantly lower return rates than the rest of the industry. Statistics indicate that return rates for these companies are around 5%, about half of what the rest of the industry experiences. In the words of one executive interviewed, ―We send out a million computers. Pretty soon, most of them come back.‖ The build-to-order model, combined with direct sales, eliminates this problem. Manufacturers also contract with remanufacturing specialists to

Parts Modules Product

assembly

Distribution Users Raw

material

Landfill

Recycle Cannibalize Remanufactur e

Refurbish Repair Reuse

develop solutions to this problem. These specialists work with manufacturers to evaluate the root cause of returns, excess and obsolete machines, and develop methods to control cost and return rates. These companies test, recondition, repair, repack and then resell the machines. The functions of service center, warranty repair and other servicing are often outsourced to a third party that specializes in this business. These programs have led to lower returns.

1.7.2 Automotive industry

The automobile industry is one of the largest industries in the world and deals with the most expensive of consumer goods. Therefore, it is not surprising that reverse supply chains is an important subject for this industry. The three primary areas in which reverse supply chains plays a significant role are:

 Salvage of parts and materials from end-of-life vehicles.

 Remanufacturing of used parts.

 Stock-balancing returns of new parts from dealers.

The big three automakers in the U.S. have joined together to form the Vehicle Recycling Development Center (VRDC) in order to increase the recyclability of cars. At VRDC, the focus is on learning to build vehicles that can be disassembled more easily. The center is investigating one of the newest trends in engineering, Design for Disassembly (DFD). With DFD, product disassembly is made easier by reducing the number of parts, rationalizing the materials and snap-fitting components instead of using chemical bonds or screws. Unlike other environmental initiatives for manufacturing, DFD offers the possibility of many unintended positive effects, such as remanufacturing. The automobile industry may be the industry with the longest history of making use of old products. According to the Auto Parts Remanufacturers Association (APRA), the market for remanufactured auto parts is estimated at $34 billion, annually. The APRA also estimates there are 12,000 remanufacturing firms (including large-scale companies) involved in the auto parts industry. One particular company remanufactures more than four million alternators, starters and water pumps every year. Out of all the starters and alternators sold for replacement, 90% to 95% are remanufactured. The closed loop supply chain is now finding its importance in automobile sectors. Auto companies encourage their customers to bring their car to the dealers for replacement of old part with the remanufactured one. The dealer in turn sends back the old defective part to the automaker for remanufacturing. This makes the automaker to supply a stable supply of parts which is remanufactured. The estimated cost of reverse

supply chains in the Indian auto and auto components industry is around 0.5% to 1% of total sales. The reverse supply chains segment has been growing at the same rate for both the auto and auto components industries during the same period.

1.7.3 Challenges

Always there remains a challenge across the manufacturing value chain for managing the reverse supply chains process. Some of these are interdependent while some are distinct. Some important points pertinent to this are given below.

 Meeting consumer needs: Customers always want the best price and completely flexible and hassle- free returns policies. This is particularly difficult to maintain in the framework of RSC.

 Volume management: Retail returns are generally high and additional to it, the total returns across the high-tech service industry are showing an upward trend. Especially during peak seasons, most of these returns are time-sensitive to process and restock for resale. If this issue is not managed properly the very objective of the RSC would end of with a loss.

 Management of costs: Expense management can represent up to 7% to 8%

of the cost of goods. The process is labour intensive with very little automation.

 Data management: Always it is important to have an accurate data, but it is very difficult to obtain and manage relevant information. An organization should understand the data source, know how to analyse it and should use sub-contracting to the third-party experts if possible.

 Disposition of product: Disposition of product is sometimes over looked in the process of product recovery in RSC. Knowing the best location to handle, destroy, salvage and even where to donate products is critical. So is the ability to handle a supplier return, whether it is defective or working with overstock balancing.

 Regulatory compliance: Organizations require complete understanding of waste management laws, regulations and processes, including the company‘s corporate social responsibility.

 Partnership throughout the product lifecycle: The key factor is to have the right partner throughout the product lifecycle. Creating a strong and cohesive supplier agreement, jointly determining the best approach, cost sharing and having a positive relationship will help improve the bottom line for everyone.